WASHINGTON — U.S. job openings rose slightly to 8.1 million in May despite the impact of higher interest rates intended to cool the labor market.
Vacancies rose from a revised 7.9 million in April, the first reading below 8 million since February 2021, the Labor Department reported Tuesday. April openings were marked down from an originally reported 8.1 million.
Layoffs rose to 1.65 million in May from 1.54 million in April. The number of Americans quitting their jobs — a sign of confidence in their prospects — was basically unchanged.
“The report was another sign that the labor market is holding firm … The expansion looks solid,’’ said Robert Frick, economist at the Navy Federal Credit Union.
The U.S. economy and job market have been remarkably resilient in the face of the Federal Reserve’s campaign to raise interest rates to rein in inflation. The Fed hiked its benchmark rate 11 times in 2022 and 2023, lifting it to a 23-year high.
Defying expectations of a recession, the U.S. economy kept growing and employers kept hiring.
But lately there have been signs the economy is losing some steam. Job openings have come steadily down since peaking at 12.2 million in March 2022. The job market is still strong. There are 1.25 jobs for every unemployed American, but that’s down from a 2-to-1 ratio in January 2023.
Fed policymakers welcome lower job openings — a relatively painless way to cool a hot job market and reduce pressure on companies to raise wages, which can feed inflation.
From January through March this year, the economy grew at an annual pace of just 1.4%, slowest since spring 2022. Consumer spending, which accounts for around 70% of U.S. economic activity, e xpanded just 1.5% after advancing at a pace of more than 3% in each of the last two quarters of 2023.
The Labor Department is expected to report Friday that employers added 190,000 jobs last month, down from 272,000 in May, according to a survey of forecasters by the data firm FactSet. Unemployment is forecast to stay low at 4%.
High interest rates have helped bring inflation down closer to the Fed’s target of 2% a year from a four-decade high 9.1% in June 2022. Progress on containing price increases is expected to allow the central bank to start cutting rates. Wall Street investors are expecting the first rate cut at the Fed’s September meeting.
Speaking at a conference in Portugal Tuesday, Fed Chair Jerome Powell said that progress toward lower inflation appears to have resumed after stalling earlier this year. But he said the Fed needed to see more evidence before it cuts rates.
___
AP Business Writer Matt Ott contributed to this story.
Despite higher interest rates, US job openings increase to 8.1 million
In a surprising turn of events, the number of job openings in the United States has increased to 8.1 million, despite the Federal Reserve raising interest rates in an effort to cool down the economy. This news comes as a welcome relief to many Americans who have been struggling to find work in recent months.
The increase in job openings can be attributed to a number of factors, including a strong economy, low unemployment rates, and a growing demand for skilled workers in various industries. Employers are finding it increasingly difficult to fill positions, leading to a surge in job openings across the country.
One of the key reasons for the increase in job openings is the booming economy. The US economy has been growing at a steady pace, with GDP growth reaching 3.2% in the first quarter of 2022. This growth has led to an increase in consumer spending, business investment, and overall economic activity, creating a greater demand for workers in various sectors.
Additionally, the unemployment rate in the US has remained low, hovering around 3.8% in recent months. This low unemployment rate has made it more challenging for employers to find qualified candidates to fill open positions, leading to an increase in job openings.
Another factor contributing to the rise in job openings is the growing demand for skilled workers in industries such as technology, healthcare, and manufacturing. Employers are increasingly looking for workers with specialized skills and experience, leading to a shortage of qualified candidates in these fields.
Despite the increase in job openings, some economists are concerned about the impact of higher interest rates on the economy. The Federal Reserve recently raised interest rates by 0.25%, citing concerns about inflation and overheating in the economy. Higher interest rates can lead to higher borrowing costs for businesses and consumers, potentially slowing down economic growth and job creation.
However, many experts believe that the increase in job openings is a positive sign for the economy, indicating strong demand for workers and continued economic growth. As long as the economy remains strong and businesses continue to expand, job openings are likely to remain high in the coming months.
Overall, the increase in job openings to 8.1 million is a positive development for the US economy, indicating strong demand for workers and continued economic growth. Despite concerns about higher interest rates, the job market remains robust, providing opportunities for Americans looking for work.
